COURT FILE NO.: F1702-11
DATE: 20180302
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Amanda April Benton
Peter D. Eberlie, for the Applicant
Applicant
- and -
Kevin Benton
William J. Doran, for the Respondent
Respondent
HEARD: February 20, 21, 22 and 23, 2018
JUSTICE J.N. MORISSETTE
Background:
[1] At issue is the determination of the respondent’s income for child support and section 7 expenses for the years 2010 to the present.
[2] The parties were married on May 26, 2007 and separated on June 12, 2009 and divorced on September 19, 2011. One child was born of their relationship, namely Brooklynn August Benton born August 10, 2008.
[3] The applicant is the custodial parent of Brooklynn and the respondent exercises regular access to his daughter.
[4] On November 9, 2010 final order was issued by Madam J. Coates based on minutes of settlement which ordered child support payable by the respondent in the amount of $1,158 per month which included the child care costs of $246 per month based on an income of $104,000.
[5] Paragraph 22 of that final order imposed an obligation on the parties to exchange their respective income tax returns before May 30th of each year in order to adjust the child support accordingly. The parties failed to abide to this opportunity to adjust the child support.
[6] In 2011, the applicant sought an amendment to the access provisions of that final order. In response, the respondent sought an amendment to the custodial regime and to amend his child support obligations. Prior to the trial, the respondent abandoned his claim for joint custody.
The issue:
[7] The respondent is the sole shareholder and director of his two corporations, known as 1717051 Ontario Inc. (171), incorporated November 30, 2006 and 1841152 Ontario Inc. (184), incorporated January 5, 2011.
[8] The respondent is in the audio/video industry, and particularly in the projector parts and bulb industry. He has been in this business since 2003. He started with the financial assistance of his father.
[9] The respondent is the controller of the finances of his corporations. At issue is whether the income reported by the corporations which declare losses each and every year accurately reflects the true income for the respondent.
[10] Is the respondent using his corporation as a tool to minimize paying taxes by charging personal expenses to the corporation? Is he underreporting his income?
Financial Statements and interim orders:
[11] As a result of the respondent’s request to adjust the child support, he filed his first sworn financial statement on November 29, 2011 in which he deposed that he earned $103,000 in 2011 and was to earn $80,000 for 2012 with annual expenses of $58,000.
[12] On July 3, 2012, Mr. Justice Henderson ordered on consent, that the child support be fixed at $912 per month commencing April 1, 2012. This was as a result that the child care expenses were no longer required at that time. This was based on the original annual gross income of $104,000.
[13] On February 22, 2017 the respondent’s second financial statement filed showed an income of $34,000 with annual expenses of $83,000. On February 12, 2018 the respondent’s third financial statement showed an income of $34,000 with annual expenses of $86,000.
[14] Further in 2012 and 2013, the issue of access were amended by consent orders. Disclosure of the respondent’s business records were still outstanding.
[15] In 2015 a motion for disclosure of business records was issued and ordered. In 2018, there was a motion for the respondent to answer undertakings; only in January 2018 did the respondent attempt to answer the undertakings.
[16] In October of 2016, the respondent unilaterally stopped paying his child support as required under the order of J. Henderson, believing that he had overpaid child support. The respondent’s income tax return for 2016 shows a line 150 income of $15,200. The respondent has declared on that return to (CRA) Canada Revenue Agency that he has paid his property taxes of $6,051.12 for that year.
[17] In March of 2017, a consent without prejudice order was entered into for the respondent to pay $600 per month in child support commencing March 15th, 2017 based on an imputed income of $65,000.
BDO report:
[18] In 2013, the respondent retained the services of BDO to ascertain his income for child support purposes. Mr. Hehl for BDO testified that in order to come to his opinion, he relied amongst other documents, on two letters that were provided to him by the respondent’s counsel. One from the applicant’s counsel[^1] and one from the respondent’s counsel[^2].
[19] Mr. Hehl’s report relied heavily on the applicant’s counsels comments and in fact the report appears to mirror the applicant’s views of the respondent’s income. Mr. Hehl informed this court that he wished to speak with the respondent and his accountant, but was denied that opportunity.
[20] At trial, the respondent has agreed to accept his own expert’s view for income in 2010 at $123,000, 2011 at $111,000 and 2012 at $81,000.
[21] The respondent has acknowledge that he has in the past use his corporation as his personal piggy bank, however he says that he no longer does that.
[22] The respondent maintains that he has invested considerably to improve his marketing strategy which he believes will allow him to get back to the income levels he used to have.
Analysis:
[23] Much of the financial disclosure provided by the respondent does not appear to be reliable. He is underreporting his income. He still charges his company for personal expenses such as gas and cell phone.
[24] The respondent’s sworn financial statements deposes expenses of $86,000 per year on an income of $34,000 or less. There is no reliable disclosure to explain how he is able to maintain his lifestyle.
[25] The respondent testified that he has borrowed over $100,000 from his equity from his home. However the disclosed financial documents only show an increase in his home mortgage from $416,000 to $450,000 in the past 6 years.
[26] On the first day of trial, the respondent wanted to produce for the first time debts owing to his father in the amount of $45,000. That was disallowed for late disclosure.
[27] His corporations show losses in excess of $180,000 for the last 6 years, without any reliable explanation of how he can manage these losses.
[28] Even with the increase of his mortgage and even if one would accept the loans by his father, it still does not explain how the respondent is able to spend $86,000 per year on an income of $34,000 or less.
[29] For these reasons, and relying on sections 19, 22 and 23 of the Federal Child Support Guidelines, I find that the respondent is “reporting” less than he ought to. I impute an annual income of $86,000 commencing in the year 2012.
Arrears or overpayment of child support:
[30] As shown in schedule “A” attached, the respondent overpaid since 2010 the sum of $2,738 in child support.
[31] However as will be discussed below, he has underpaid his section 7 expenses.
Section 7 expenses:
[32] The applicant testified that she tried to engage the respondent in paying his section 7 expenses without resorting to lawyers and the courts. She attempted through email to obtain various expenses such as “before and after school” programs, summer camps and dental expenses.
[33] The respondent has not paid any of these section 7 expenses since 2013.
[34] Having determined the income for the respondent since 2012 at $86,000, their respective obligations for these expenses are now fixed at 65% for the respondent and 35% for the applicant, starting in 2016. Prior, their respective ratio was 70% 30% as ordered by Madam Justice Coates.
[35] The evidence[^3] establishes that the respondent owes at a minimum the sum of $6,829 in his prorated share of section 7 expenses from 2013 till the end of 2017[^4].
[36] The respondent shall pay his proportionate after tax share for 2018 a sum of $120 per month in section 7 expenses commencing January 1, 2018. The applicant shall provide to the respondent annually by March 1st of each year commencing March 1st, 2019 with all receipts and proof of payment for the previous year.
Child Tax Benefit:
[37] The respondent shall pay to the applicant the sum of $1,547.57 as reimbursement of his claim for the child tax benefit he erroneously claimed as a joint custodial parent from Canada Revenue Agency.
Life Insurance:
[38] The respondent must obtain and maintain in good standing at his own cost, a life insurance policy with a face value of no less than $250,000 and name the applicant as trustee for Brooklynn to secure the child support obligation the respondent has.
[39] In the event that the respondent dies without adequate life insurance to secure his existing child support obligation, that obligation shall be a first charge against his estate.
Disposition:
[40] The respondent shall pay child support in the amount of $921 per month commencing January 1, 2018 for the child Brooklynn Benton based on an imputed annual gross income of $86,000, which includes the sum of $801 as the table amount plus his prorated share of $120 per month in section 7 expenses.
[41] The respondent shall pay to the applicant within 60 days from the date of this judgment the sum of $5,641[^5] as arrears of child support owing to the applicant.
[42] As of May 30, of each year commencing on May 30, 2019, the parties shall exchange complete tax returns for the previous year and all other income information as required by section 21 of the Federal Child Support Guidelines.
Costs:
[43] Should the parties be unable to agree on costs, I may review brief written submissions by no later than April 9, 2018.
Interest:
[44] This judgment bears post judgment interest according to the Courts of Justice Act.
”Justice J.N. Morissette”
Justice J.N. Morissette
Released: March 2, 2018
SCHEDULE ‘A’
Benton v. Benton
Court File #1702/11
ARREARS OR OVERPAYMENT OF CHILD SUPPORT
YEAR
IMPUTED ANNUAL GROSS INCOME
CHILD SUPPORT PAYABLE
CHILD SUPPORT PAID
OVERPAYMENT
UNDERPAYMENT
2010
123,000
1,053
912
1,692 (141 x 12)
2011
111,000
963
912
612 ( 51 x 12)
2012
86,000
770
912
1,704 (142 x 12)
2013
86,000
770
912
1,704 (142 x 12)
2014
86,000
770
912
1,704 (142 x 12)
2015
86,000
770
912
1,704 (142 x 12)
2016
86,000
770
912
1,278 (142 x 9)
Oct/Nov/ Dec 2016
86,000
770
0
2,310 (770 x 3)
Jan/Feb 2017
86,000
770
0
1,540 (770 x 2)
Mar – Dec 2017
86,000
770
600
1,700 (170 x 10)
OVERPAYMENT BY DAD: 8,094
UNDERPAYMENT BY DAD: 7,854
LESS GARNISHED AMOUNTS: 2,124
_ 374
5,356
NET UNDERPAYMENT BY DAD: = 5,356
OVERPAYMENT BY DAD: 2,738
SCHEDULE ‘B’
Benton v. Benton
Court File #1702/11
ARREARS OF S.7 EXPENSES
YRS
Proof of s.7
R’s Prorated Percentage
R’s Share
2013 $ 923 at 70% $ 646
2014 $3,287 at 70% $2,300
2015 $2,496 at 70% $1,747
2016 $1,735 at 65% $1,128
2017 $2,446 at 65% $1,590
$6,829
COURT FILE NO.: F1702-11
DATE: 20180302
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Amanda April Benton
Applicant
- and -
Kevin Benton
Respondent
REASONS FOR JUDGMENT
Justice J.N. Morissette
Released: March 2, 2018
[^1]: Exhibit 7
[^2]: Exhibit 8
[^3]: Exhibit 12 and 13
[^4]: See schedule “B”
[^5]: Arrears of s. 7 expenses of $6829 less overpayment of child support of $2,738 plus CTB owing to the applicant for a total net arrears of $5,641